New apartment company enters Atlanta market, eyes Florida expansion
By Jessica Saunders
Tampa Bay Business Journal
Published: Mar 2, 2017

A private family-owned real estate company entered the metro Atlanta market with a $32 million off-market purchase of a 322-unit apartment complex in south Fulton County.

Suffern, New York-based Castle Lanterra Properties bought Alta Coventry Station at 3378 Greenbriar Parkway SW, built in 2008. It's beginning to renovate the clubhouse, leasing office, fitness center and pool. It plans to upgrade unit interiors at the pace of normal turnover, Managing Director Austin Alexander said. Unit interiors were slated for new flooring, plumbing fixtures, lighting and countertops. The company plans to spend about $1.5 million.

The name of the property will be changed to Landing Square. The deal closed in December.

Castle Lanterra Properties, which has 8,300 apartment units nationwide valued at $1.5 billion, now is looking to add as many as 3,000 units in metro Atlanta in the next three years.

The 19-year-old company historically has focused on property in the Northeast and Mid-Atlantic regions but in the past few years has shifted to growth markets such as Atlanta. It has a sizeable presence in Texas (2,000 units in Austin; Corpus Christi), and is actively looking in Atlanta, Florida, the Carolinas, Texas (Dallas, Houston), Phoenix, and all other markets where it currently has a presence.

The company sought acquisitions in Atlanta for the past few years, attracted by the metro region's strong economy relative to other cities and the resulting growing workforce, Alexander said. It was difficult to find properties at the price point it was seeking, and the company was frequently outbid.

Alta Coventry Station was located through a mutual relationship, Alexander said. It was one of two properties left in the portfolio of a private, smaller fund that was looking to sell to a group that could execute quickly.

"In Atlanta we are not assessing a huge change to the (sub) market but there are a lot of jobs coming to that area,” Alexander said. He cited Tyler Perry Studios at the Fort McPherson redevelopment, which is expected to create 8,000 jobs; and the company in a news release about the purchase cited other large Southside employers including Delta Air Lines Inc., Porsche Cars North America, Lowe's, Procter & Gamble, Walmart, Clorox and Kraft.

The property's proximity to downtown and Hartsfield-Jackson Atlanta International Airport are pluses, he said.

Once Castle Lanterra enters a market, its intention is to buy a minimum of 1,000 units in the market in the ensuing 24 to 36 months, said company founder and CEO Elie Rieder. It holds the properties it buys long-term.

"We are targeting 2,000 to 3,000 units in Atlanta – a minimum of 1,000 – over the next two to three years,” he said.

"We are focused on properties where we can implement value-add strategies to improve the aesthetics and quality of life for tenants,” he said.

Its acquisition priorities are location, quality of construction and how the property will look after Castle Lanterra finishes working on it, he said. "We are not an institution and we are not a fund. We don't have boxes we need to check.”

Castle Lanterra just closed a $103 million deal for its first property in Denver, Alexan Sloan's Lake, 2016 construction located in the Sloan's Lake Park area, and expects to close in two weeks on a new property in Texas. It also has acquired new construction in northern New Jersey.

Data from multifamily housing rental data firm Axiometrics shows rents declining in Atlanta in the new year, following a two month downward trend from the end of 2016.

"Atlanta apartment market performance is continuing to moderate as supply is catching up with demand, and we expect that trend to play out further in 2017 as new supply in the market hits a peak,” said Jay Denton, Axiometrics' senior vice president of analytics. "The market should continue to moderate as competition among newer properties increases and landlords are less aggressive on rent increases in an attempt to fill units.”